The Government’s reintroduced bill to make insurance opt-in for under 25s and low-balance superannuation accounts is facing opposition from life insurers, super funds, intermediaries and even the Cancer Council.

Those calling for the bill to be dumped or substantially altered include AIA, Australian Super, the Corporate Super Association (CSA), MetLife, First State Super, QSuper, Munich Re, TAL, Rest Super, AMP, the Financial Planning Association (FPA), the Association of Financial Advisers (AFA), and the Cancer Council.

AIA says in its submission on the bill that insurance in super is cheap and efficient and helps meet the underinsurance gap.

“The suggestion that default insurance within super is highly profitable at the expense of everyday Australians is patently false.”

Group life pays out 84 cents for every premium dollar it receives, and is affordable because it provides cover to all, AIA says. The bill would result in $450 million in claims no longer being paid to under 25s or low balance account-holders.

TAL, CSA, MetLife, and First State Super have raised concerns about the impact the changes will have on young employees in high-risk occupations who cannot source coverage from retail life insurers. They say such people should either be excluded from the legislation or trustees should be able to elect to keep insurance cover for these members.

Australian Super, Munich Re, TAL, and QSuper say insurance should not be made opt-in for those with active accounts under $6000, while the CSA says applying opt-in for such members is “fraught with practical difficulties”. However, Australian Super does support making insurance opt-in for under 25s.

Rest Super completely opposes the legislation, saying approximately 40% of its members would be left financially vulnerable without insurance.

“There are better ways to manage this important issue,” it says.

Both TAL and AIA argue that risk-only members who have opened a super account solely for the purpose of maintaining individual life cover should not have it cancelled. This “perverse outcome” is indicative of the lack of consideration that has been given to the unintended consequences of the bill, AIA says.

AMP similarly says more than 5000 of its members have elected to keep their insurance even though their super accounts are inactive. A further 440 customers asked for their insurance to be reinstated on their inactive accounts after it was cancelled on July 1.

AIA says the two-month transition period between the bill being passed and implemented “borders on reckless”, and MetLife and AMP are also calling for it to be postponed.

The FPA is calling for TPD insurance to remain opt-out, citing the widespread problem of underinsurance. The AFA says the $6000 cut-off for opt-in should only apply to new members, and that opt-in should be for under 21s, and only if they don’t have dependents or a home loan.

The Cancer Council wants a full assessment of the impacts before removing default insurance, saying it would leave cancer sufferers, low-income earners, women, indigenous and disabled people disadvantaged.